Online shops may leave the retailing king Gerry Harvey cold, but the generation Y fashion label Sportsgirl has hit the mark with its web store launched last November. Sales are rapidly approaching that of a mid-size Melbourne outlet, says Sportsgirl chief executive Elle Roseby.
The 20 to 30 per cent growth in online sales each month since Christmas has dispelled senior managers' concerns about the popularity of buying clothing online.
"There certainly was a fear that this wouldn't work," Roseby says. "Quite a few of us really stuck our necks out to support this move and there were times when it was bloody hard to get it across the line."
Unlike other industries where selling online brings lower operating costs, Sportsgirl's online store increases overheads for a number of reasons. "It requires a completely different way of styling and shooting products," Roseby says.
"Everything about the experience has to be engaging, right down to receiving the goods five days after you purchase them online."
Sportsgirl made a conscious decision to keep the online store separate from its existing retail network.
It operates out of the central distribution centre and has a separate management team, including marketing, procurement and information technology staff.
Bringing the 12 heads of the retailer's divisions together to create the web store has been crucial to its success, says Peter Noble, chief executive officer of Citrus, the digital agency that helped Sportsgirl design its online store.
To replicate the dressing-room experience, Sportsgirl encourages shoppers to post a fashion item or accessory on their Facebook profile and ask their friends if it is hot or not.
Incorporating gen Y's penchant for social networking sites is a smart move, says Hitwise Asia-Pacific analyst Sandra Hanchard. "Social networks are becoming an increasingly important channel for attracting visits to apparel websites, with an increase in referral rates of 34 per cent year on year in March 2008.
"We're seeing more Australian clothing brands recognise the opportunity to reach young internet users online through branding initiatives on social networks." Facebook and MySpace are leading the charge.
Asked if the web store would survive an economic downturn, Roseby says it is not an experiment undertaken because the company has spare capital to splash around. "This is not a nice-to-have for us. Specifically because of our gen Y target market, this is imperative for remaining relevant to our customers."
However, Sportsgirl frequently reinvents itself. If management senses that the next generation of 18 to 24-year-olds is not using the internet in the same way as their current customers, the web store will go.
Noble says this is a smart way to look at online retailing. "A brand should consider how this performs in the network of stores, plus what's the next step to making this portal more engaging."
Online stores are undergoing a resurgence with retailers homing in on social networking as the way to make web stores more successful.
Woolworths is one supermarket taking a second punt. Its first attempt at online shops, at the height of the dotcom boom in 2000-01, flopped alongside most other big retailers.
But the landscape has changed, Woolworths' chief information officer, Dan Beecham, says, allowing much more interesting things to be done online.
The challenge for Woolworths is to utilise the web to make the experience of buying groceries as quick, efficient and interesting as possible.
Analysts of the internet shopping trend believe that the aim should not be how to drive online sales versus store sales, but rather how to use online as a strategic channel to engage the customer.
This desire to build online and real-world communities is part of a push by the retail industry to make itself central to people's lives.
"MySpace, Facebook are a huge success so that's an indicator of what customers want," Beecham said in an interview with The Australian Financial Review.
By 2012, almost half of all retail purchases will in some way involve the internet but many retailers are failing to integrate the web into their operations, principal of the Deloitte professional services firm Kasey Lobaugh says.
Adrian Mullan, author of The Internet Demystified and founder of WebDummy.com, a popular internet marketing resource for small business owners, says the reason online retailing has worked for some brands and not others is largely down to incentives. "Pioneers of selling online, like Dell, offer people an incentive to buy online - a free printer or free shipping."
Mullan rejects the notion that products people need to see, feel and touch don't sell well on the internet. "Most things can, and are, being sold online. A common theme is that someone will test the waters with an online auction site like eBay. If they experience some success here, they'll take the next step and set up their own online store."
Resurgence or not, companies won't be pouring as much money into web stores as before, Deloitte partner and head of technology, media and telecommunications Damien Tampling says.
This is because they are smarter about purchasing decisions, and the fact that the cost of the technology - supply chain, warehousing and logistics systems - behind good e-commerce has dropped substantially.
© Fairfax Business Media
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